During the 1906 International Cup for Motor-Cycles held in Austria, the event was plagued by accusations of cheating and sharp practices. A conversation on the train journey home between the Secretary of the Auto-Cycle Club, Freddie Straight and the brothers from the Matchless motor-cycle company, Charlie Collier and Harry Collier and the Marquis de Mouzilly St. Mars led to a suggestion for a race the following year for road touring motor-cycles based on the automobile races to be held in the Isle of Man on closed public roads.
The new race was proposed by the Editor of "The Motor-Cycle" Magazine at the annual dinner of the Auto-Cycle Club held in London on 17 January 1907. It was proposed that the races would run in two classes with single-cylinder machines to average 90 mpg and twin-cylinder machines to average 75 mpg fuel consumption. To emphasise the road touring nature of the motor-cycles there were regulations for the inclusion of saddles, pedals, mudguards and exhaust silencers.
The first race was held on Tuesday 28 May 1907 and was called the International Auto-Cycle Tourist Trophy. The event was organised by the Auto-Cycle Club over 10 laps of the St John's Short Course of 15 mi 1,470 yd (25.484 km).
The first Isle of Man TT Race in 1907 was for two different classes of touring motor-cycles. The winner of the single-cylinder class, and overall winner of the first event in 1907, was Charlie Collier riding a Matchless motor-cycle in a time of 4 hours, 8 minutes and 8 seconds at an average race speed of 38.21 mph (61.49 km/h). The winner of the twin-cylinder class was Rem Fowler riding a Peugeot enginedNorton at an average race speed of 36.21 mph (58.27 km/h).
The trophy presented to Charlie Collier as the winner of the 1907 Isle of Man TT Race, was donated by the Marquis de Mouzilly St. Mars. It featured a stylised version of Olympic God Hermes by Giovanni Da Bologna as a silver figurine astride a winged wheel. The trophy was similar in design to the 18 carat gold Montague Trophy presented to John Napier (Arrol-Johnston) as the inaugural winner of the Isle of Man Tourist Trophy car race in 1905 now known as the RAC Tourist Trophy. The Marquis de Mouzilly St. Mars Trophy is now presented annually to the winner of the Isle of Man Senior TT Motor-Cycle Race.